Popular clothing retailer H&M  (HNNMY) , which operates over 500 stores in the U.S., is beginning to feel the brunt of a major change in consumer behavior.

The retailer just revealed in its third-quarter earnings report for 2024 that its customers are starting to pull back on their spending, and it's having a negative impact on sales.

Related: Popular fast-fashion brand hikes prices amid controversy

During the third quarter, H&M’s net sales across all regions declined by 3%, compared to the same time period in 2023. In North and South America specifically, sales shrunk by 2%. The company’s operating profit, which is how much money a company has left after paying expenses, also decreased by 26%.

“Consumers’ living costs have remained high during the year, and at the same time we continue to see turbulence in the world around us,” said H&M CEO Daniel Ervér in the report. “External factors have impacted our sales revenue and purchasing costs more than we expected.”

The retailer also claimed in the report that cold weather in “key” European markets negatively impacted sales in June.

As H&M faces a slump in sales, the retailer is planning to refurbish about 250 of its stores across the globe and will close more stores than it plans to open.

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“After reviewing priorities as regards to things that do not strengthen the H&M brand or contribute to each brand’s long-term sales and profitability, additional stores have been identified for consolidation,” said H&M in the earnings report. “For 2024 the plan is to open around 100 new stores and close around 200 stores, making a net decrease of around 100 stores. Most of the openings will be in growth markets, while the closures will mainly be in established markets.”

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Despite dwindling sales, H&M believes that sales in September will increase by 11%, compared to the same time period last year, due to its “very well received” autumn collection, which is fronted by celebrities such as Charli XCX, Lila Moss and Arca.

It appears that the retailer is also planning to lower prices at its stores as it expects for the cost of markdowns to increase year-over-year during the fourth quarter.

Consumers are ditching retailers for second-hand apparel

As many consumers across the country are battling high inflation and a higher cost of living, many have been cutting their spending on apparel and have instead opted to purchase second-hand clothing items.